Is it allowed to downgrade about 75 incidents per month orginally created as severity 1 or 2 to less severity.....

I suspect, this is happening to save incident management process from SLA misses.... they can justify the downgrade stating - that the time of incident being raisedit impact heavily...and as and when the incident was worked upon the impact started reducing and hence the downgrade..

is this allowed and is it the right way to deal with an Incident Ticket?

It is entirely right to have the facility to downgrade the incident severity.

In terms of your situation, downgrading 75 incidents per month if you only have 75 incidents per month is a bad thing. Downgrading 75 incidents per month, if you get 1 million incidents per month, is less of an issue.

However it is no bad thing to analyse each instance and determine the reasons why each was downgraded. This should be done as part of continual service improvement. If the motives for downgrading do not contribute to service improvement then I think you would probably be correct in your assumption that this was done for under hand reasons.

Incidentally, do you keep stats on the number of incidents which were upgraded to a higher severity? How many were upgraded during the same period?....